Jan 22, 2024 - Business

Alameda Research drops excessive-fee lawsuit against Grayscale

Crystal Kim

Illustration of a gavel caught on a fishing hook. — Illustration: Brendan Lynch/Axios

FTX's sister hedge fund Alameda Research has voluntarily dismissed its lawsuit against Grayscale Investments.

Why it matters: Sam Bankman-Fried's trial is over, but FTX's bankruptcy proceeding is very much ongoing — and the crypto exchange, under the leadership of John Ray III, has been on a mission to recover billions for its creditors.

Flashback: The lawsuit, filed in March, was one of the tools Ray intended to use to "maximize recoveries," per a press release. The argument being that GBTC's high fees and its inability to allow redemptions were costing FTX creditors. (Alameda is part of the FTX bankruptcy estate).

It attempted to gather other disgruntled GBTC holders to join the suit, but failed to meet a key threshold in time.
Fir Tree, a hedge fund that sued Grayscale for similar reasons, dropped its suit in July.

Of note: Claims against Grayscale CEO Michael Sonnenshein, Digital Currency Group and DCG chief Barry Silbert were dropped with the lawsuit.

State of play: GBTC's conversion to a spot bitcoin ETF last week would have addressed those issues.

The bottom line: FTX's estate is free to sell GBTC post-conversion, and perhaps, it already has done just that.

Editor's note: This article has been updated with new details throughout.

Add Axios on Google

Alameda Research drops excessive-fee lawsuit against Grayscale

What to read next